Avon 2008 Annual Report Download - page 85

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of loss that could result from unfavorable outcomes but, under
some circumstances, adverse awards could be material to our
consolidated financial position, results of operations or
cash flows.
We are voluntarily conducting an internal investigation of our
China operations, focusing on compliance with the Foreign
Corrupt Practices Act. The internal investigation, which is being
conducted under the oversight of the Audit Committee,
commenced in June 2008 after we received an allegation that
certain travel, entertainment and other expenses may have been
improperly incurred in connection with our China operations.
We have voluntarily contacted the Securities and Exchange
Commission and the United States Department of Justice to
advise both agencies that an internal investigation is underway.
Because the internal investigation is in its early stage, we cannot
predict how the resulting consequences, if any, may impact our
internal controls, business, results of operations or
financial position.
Various other lawsuits and claims, arising in the ordinary course
of business or related to businesses previously sold, are pending
or threatened against Avon. In management’s opinion, based on
its review of the information available at this time, the total cost
of resolving such other contingencies at December 31, 2008,
should not have a material adverse effect on our consolidated
financial position, results of operations or cash flows.
NOTE 16. Goodwill and Intangible
Assets
On April 2, 2007, we acquired our licensee in Egypt for approx-
imately $17 in cash. The acquired business is being operated by
a new wholly-owned subsidiary and is included in our Western
Europe, Middle East & Africa operating segment. The purchase
price allocation resulted in goodwill of $9.3 and customer
relationships of $1.0 with a seven-year useful life.
In August 2006, we purchased all of the remaining 6.155%
outstanding shares in our two joint-venture subsidiaries in China
from the minority interest shareholders for approximately $39.1.
We previously owned 93.845% of these subsidiaries and con-
solidated their results, while recording minority interest for the
portion not owned. Upon completion of the transaction, we
eliminated the minority interest in the net assets of these sub-
sidiaries. The purchase of these shares did not have a material
impact on our consolidated net income. Avon China is a stand-
alone operating segment. The purchase price allocation resulted
in goodwill of $33.3 and customer relationships of $1.9 with a
ten-year weighted-average useful life.
Goodwill
Latin
America
Western
Europe,
Middle East
& Africa
Central
& Eastern
Europe
Asia
Pacific China Total
Balance at December 31, 2007 $94.9 $37.8 $8.8 $10.4 $70.3 $222.2
Adjustments – .3 – – – .3
Foreign exchange – (4.8) – 2.0 4.8 2.0
Balance at December 31, 2008 $94.9 $33.3 $8.8 $12.4 $75.1 $224.5
A V O N 2008 F-33